Rithm Property Trust Aktie

Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Property Trust's First Quarter 2026 Earnings Call. Joining me today are Michael Nierenberg, Chief Executive Officer of Rithm Capital and Rithm Property Trust; and Nick Santoro, Chief Financial Officer of Rithm Capital and Rithm Property Trust.

Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Property Trust website, www.rithmpropertytrust.com. If you've not already done so, I'd encourage you to download the presentation now. I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

And with that, I will turn the call over to Michael.

Thanks, Emma. Good morning, everyone, and thanks for joining us. For the quarter, the company had a pretty uneventful quarter as we continue to look for opportunities that could be a game changer for this capital vehicle. With asset manager valuations under pressure, downward pressure on equity valuations in the public markets, we're going to continue to remain patient and work towards creating value for shareholders. While the geopolitical events affecting the world, credit spreads have remained actually in a relatively tight range and markets in general are performing well away from the headline risk we've seen in some of the retail private credit.

Even there, if you take out the retail component, private credit is still performing well. The [ softer ] headlines you've been reading about will take a while to play out and the earlier vintages in the private credit world where companies borrowed money at large multiples of revenue will likely be the ones affected negatively in the future. And a lot of those deals were originated back in the '20 '21-ish kind of vintage. For RPT, we positioned the company for success by doing the following. When we took over this vehicle in '24, we made a decision to clean up the balance sheet, liquidate a lot of the residential stuff and reposition the company in the commercial space using this as an opportunistic vehicle to deploy capital in the commercial world. Today, the company has just a little under $100 million of cash and liquidity.

The balance sheet is extremely clean. There's no problem loans and again, is in great shape. While we continue to wait for the opportunity to transform the company, we'll continue to pay the dividend. From an optionality standpoint, at some point, it's likely if we can't -- we need to grow the vehicle, quite frankly, from an overall capital standpoint. If we can, we'll be looking at different opportunities in the M&A world. And at some point, we may consider even buying back a little bit of stock here. With that, I'll refer to the supplement that we posted online.

I'm going to start on Page 3. And again, this is just really the summary of what Rithm is, Rithm Property Trust. Today, the pipeline is, give or take, about $2 billion. It's always fairly robust. We're looking at large opportunities in the multifamily space. We also evaluate things that we could potentially do around our Genesis business, where we continue to grow our multifamily lending there. The equity is a little bit under $300 million. It's about $287 million. The commercial real estate portfolio, this is all post '24 vintage things that we've done is $236 million, and we have, give or take, a little bit under $100 million of cash and liquidity. When you look at the financial highlights for the quarter, quite frankly, not a lot of activity.

We sold down a little bit of -- we sold a few CRE floaters in the quarter to create a little liquidity, looking for better opportunities, quite frankly, to increase earnings. As I pointed out in my opening remarks, the credit markets have continued to perform well. The CMBS markets perform well. But while saying that, we'll continue to monitor opportunities to turn over the portfolio and deploy capital in higher-yielding assets. GAAP income, negative $3.2 million or $0.42 per diluted share. Keep in mind, we did a reverse split. I think it was in Q4. Earnings available for distribution, negative $300,000 or $0.04 per diluted share. Again, not a lot of activity.

A lot of this relates to either the G&A or the dividend paid. Dividend paid in the quarter, $0.36 per diluted share, which correlates to about a 10.8% dividend yield based on where the equity is trading today. Book value, $236.2 million or $30.83. And then as I pointed out, cash and liquidity a little under $100 million. When you look at RPT, I mentioned again earlier, the strategic transformation. Again, going back to when we took over this vehicle, we cut G&A dramatically. We cleaned up the balance sheet. We sold down a lot of the residential portfolio where we could. And I'll talk a little bit about the equity that's remaining in the book. We've made some new CRE investments, and that was mostly done in floating rate AAA CMBS.

We made a few loans on the debt side. We deployed $50 million in equity alongside Rithm in the Paramount transaction, which we closed in December of '25. We continue to renegotiate our repo agreements, and we continue to improve liquidity. So overall, the company is in, what I would say, as much as there's no very little activity in great shape, and we look for an opportunity to deploy capital or create more capital, quite frankly, on something that's going to be a game changer. I'd like to go back and refer to what Blackstone did with BXMT many years ago or what we did with Rithm, which was going back to 2013, where we started that with $1 billion of capital. And today, the company has about $8 billion of capital. So we need to be patient here. As I pointed out, we'll continue to pay the dividend.

At some point, we need to make a move in either clean up the vehicle or figure out a way to grow it. And obviously, we're actively trying to grow the vehicle. When you look at Page 6, the repositioning of the portfolio, where we can go here. I pointed out on the Genesis side, we're doing more lending in the multifamily space. There could be some opportunities to work together with that company. We continue to look for opportunities to put our capital in the debt markets on the CRE side, and then we'll continue to evaluate opportunistic investments and figure out different ways that we can increase shareholder value. And then on Page 7, it really just talks about how Rithm Property Trust benefits from the overall Rithm ecosystem, and that includes the Paramount transaction that we closed in December and then our asset management businesses, Sculptor and Crestline.

So with that, I'll turn it back to the operator. We could open up for Q&A and then get on with our beautiful Friday.

[Operator Instructions] And your first question comes from the line of Craig Kucera with Lucid Capital Markets.

Optically, it looks like the strategy this quarter was to reduce your CMBS holdings and deleverage. Are you expecting to lever back up in the near term by investing in other asset classes such as loans from Genesis? Or should we expect leverage to be a little bit diminished for the near term?

Yes. We looked during the quarter, the market felt -- despite performing well, the market felt or the world feels horrible. So when you think about that in credit spreads, and we saw high-yield gap a little bit wider, but then it came in about 50 basis points to where it is today. So we use that as an opportunity to say, if the world doesn't feel as good, let's sell down some of our, what I would call, levered AAA CMBS, which is yielding, give or take, about 10% with the thought as we might be able to deploy more capital in higher-yielding assets.

Quite frankly, we -- at this point, we'll continue to sit on the cash and look for those opportunities. I mentioned in my opening remarks, we're looking at a large portfolio now of multifamily assets that will be coming at some point in May. And we're seeing some opportunities on the debt side, quite frankly, that I think we'll be able to deploy capital at higher yields. than where we are on some of the AAA CMBS. But for now, it wasn't really just to reduce leverage. It was to create more capital for what I would call opportunistic investing. But at some point, that capital will get redeployed where that goes back into a debt, some kind of lending, multifamily or even buying back some equity here.

Got it. And I guess if the market or at least how you feel about the world continues to be sort of miserable, do you think you'll continue to harvest proceeds from CMBS? Or do you think you kind of work through what you wanted.

It's a really -- we're in a really interesting period of time, right? Because when you read the headlines or you think about the headlines, there's been a lot of negativity around private credit, yet you look at a lot of firms that are in the [ PE ] business, and they're still sitting on a lot of these portfolios that go back many, many years you look at the equity markets were at all-time highs. So if you think about private credit, private credit sits on top of equity.

So what's going to go first, the equity. So when you look at the public markets in general, the markets feel -- as much as the world feels terrible, the markets are performing extremely well. We look across RMBS, you look across CMBS, you look at the liquidity that we're seeing in all these different lending markets, things are actually okay. The geopolitical side just feels horrible though. Obviously, there's a lot of headline risk coming out of the administration and other places. But -- so I think we're just looking for better opportunities to actually create more earnings.

Got it. Changing gears, there was a pretty decent pickup in professional fees this quarter. Was that more just a onetime event? Or should we expect to see something similar going forward?

That was a onetime event in the quarter. It had to do with us looking at various capital options.

Okay. Fair enough. And this quarter, you closed on the Paramount transaction in the fourth quarter and at the Rithm Parents and of course, Rithm Property put in $50 million. Was there any impact to the income statement this quarter from Paramount?

Paramount for the quarter was essentially flat.

Okay. That's helpful. Will that ramp up at any point? Or should we expect that to be really more of a backloaded type of investment?

No, it will ramp up as the investment continues to accrete and as we make progress on Paramount.

Just a little color on that. When we took -- we closed the company, I believe we closed the transaction on December 20. So we've had really just a quarter of working on that. We've taken G&A from $65 million down to about $30 million. The performance, the lease-up activities is at the highest levels we've seen in 20-plus years. When you look at the properties, you have New York and San Francisco. We're in the middle of doing a few refinancings. We have some potential JV equity investments.

So we're excited about that. We've had a ton of conversations with different [ LPs ]. The initial thought there was -- it's an opportunistic situation. But around that, we're going to raise capital either from third parties or just bring in JV partners with the intent of trying to make 2x and 20-plus percent on our money. So some of it will be back-ended. Some of it will be, as to Nick's point, as we accrete up over time, but that hopefully should be a good one. You look at our New York portfolio, it's -- for the most part, it's essentially leased up. So things are good on that one.

Your next question comes from the line of Jason Stewart with Compass Point.

On the Genesis loans, are those likely to be more portfolio-based or chunky? Or is there an opportunity for flow? And then a follow-up on Craig's liquidity questions. Is there an opportunity to do anything with the unsecured debt just given how much liquidity is on the balance sheet?

So the unsecured debt, I believe, is like a [ 9% ] and [ 7% ], [ 8% ] kind of coupon. If we could get the company rated a little better, that drops to [ 8% ] and [ 7%], [ 8% ] When you think about that in the debt markets for this type of company, it's not a horrible cost of capital. Obviously, we want to make it more accretive and make sure the investments are more accretive, thus selling down some of the CMBS and looking for an opportunity to deploy in higher-yielding assets. When we think about Genesis, on the Genesis side, we bought this company, I think, in late '21/'22.

At that time, they were doing $1.7 billion of production. The company was making $40-odd million of EBITDA. We've taken that where this year, I think we're going to do something between $6 billion and $7 billion of production, and the company should make between $150 million and $200 million of EBITDA. So it's been -- knock wood, it's been a very good successful acquisition, and it's been a great feeder for our business. From Genesis, we've established a couple of things. One is we have a nontraded REIT we launched with one of the large money center banks where we're actually raising capital alongside some of the production that comes out of Genesis. That's gone extremely well. We've also done a large [ SMA ] around some of the Genesis flow with one of the sovereigns overseas.

So when we look at what we've done there, that's been a great one. Now we're actually looking at, is there a way to take these assets in the securitization market, quite frankly, that could be north of 20% or 15% to 20%. Can we actually use this vehicle to -- either around multifamily or some of the other stuff that's not going into these flow programs to actually grow earnings at RPT. So that's something that we're extremely focused on. Hopefully, we get there, and that business continues to grow. So that's really the thought around the Genesis side.

Your next question comes from the line of Henry Coffey with Wedbush Securities.

Obviously, actually a lot of progress in here and you cut your losses. And if we go with Nick's comments, we're almost at the point of breakeven on an EAD basis. If you -- things -- the environment or the political environment is bad, but it's probably not going to get worse. And so it's fair to say that the debt and credit markets, whatever they are, aren't going to get worse. And what's the holdup in terms of deploying assets? Are there like opportunities like you said, that don't show up until May? Are there enough opportunities out there where you could, if you wanted to push hard, leverage this thing up now? What is sort of the overall temper of the market right now in terms of opportunities?

This vehicle on a relative basis, Henry, is extremely small. We need to create a large pool of capital to make a difference in the earnings and profile of the company as we go forward. And I think to your point on the equity or the debt and credit markets, there's a ton of capital still out there in the markets being deployed. When you look at all the headline risk, and you've heard some of the other folks that run some of the larger asset managers, on the -- the real headlines around the private credit stuff were really the redemptions that came about from retail. Anybody that has institutional money, those are typically going to be in longer-dated locked-up funds. So that's not really the problem in what I would say, the credit markets. So if somebody comes out and I use this example, I was in Asia last week speaking. If you look, most of these documents have, I'll call it, redemption limits for a specific reason.

To the extent that retail comes in and they want -- and you've seen folks want 10% or 15% out of some of their -- out of some of these funds, a lot of the funds have 5% limits. And they have 5% limits for a reason because you don't want to just liquidate good assets for the sake of liquidating because retail needs the money back. So I think my whole view on this is that on the private credit markets, it's really an education process. how do people -- how does a private wealth client buy into a private debt fund or private credit fund, making sure they understand really what the liquidity functions are. Because what you're seeing in the markets these days, there's been a lot of demand for evergreen type funds.

We have an evergreen type fund out there, I mentioned on the Genesis stuff. And you just have to make sure there's an ample amount of liquidity. Now it's a very different thing, I think, when you have assets that are secured by -- or cash flow that's secured by assets as what we do in Genesis and really in the so-called [ ABS space ]. But the gist of it is around the private credit markets is that you're not seeing a lot of selling. You're seeing more capital that continues to get deployed, and you haven't seen this huge gap in spreads.

So overall, when you think about where we are, there are going to be opportunities, but we haven't -- we wanted to create a little liquidity during the quarter in the event that we could deploy at a much higher level. And quite frankly, we just haven't seen it come to fruition. I pointed out on the multifamily stuff, that -- it's a reasonable size deal that we're actually looking at. Rithm Property Trust cannot do the entire thing, just to be clear. So that it could be a combination of third-party capital, Rithm Property Trust and Rithm. And I guess -- and again, that's similar to what -- the way a lot of these other larger asset managers have grown their business where they're using different capital vehicles and funds to share in the, I'll call it, in the wealth of a great investment.

On the capital side, this is -- there's a funny [ cajun ] joke that I'll share with [indiscernible] later on, but this is kind of a chicken or an egg thing. And it seems -- we have a lot of confidence in you as investors. And there seems to be a point where you just have to kind of do it, accept maybe some near-term dilution and then get on with the business of growing RPT into a bigger business. What does that pain threshold look like for you?

I think as long as we think that we could do something that's accretive longer term for shareholders, we'll do it. I mean I think the whole notion of the REIT business, when you think about it logically, where REITs trade relative to asset management companies, and it's effectively the same thing. The only difference is I look at Rithm, our bigger company, obviously, we're trading, give or take, 5x EBITDA. You look at some of the larger asset managers, they could trade anywhere from 10 to 30x -- so the whole arbitrage, if there is an arbitrage is to continue to create asset management vehicles where you can turn them from 5x to 10x.

In the case of Rithm, if we did something like that, the stock is a $20 to $30 stock, and it trades at, give or take, $10. If you look at Rithm Property Trust, we need to raise pools of capital. We've been very good and disciplined around maintaining book value in all of our REIT vehicles because I think we're -- we have a lot of expertise around the house. We've been doing this for 30-plus years or whatever it is. And from a market perspective, we're typically -- we have a reasonable view from a macro level. As it relates to this vehicle, to the extent that we can raise a large pool of capital and it gets deployed accretively and all of a sudden earnings start moving, we'll do it in a heartbeat.

I mean the stock is at half of book value issuing stock here would be painful, but maybe also the recognition that the market is not really getting it and maybe the pain from issuing stock at this level would only be temporary. And I'm just kind of thinking...

But you need to do it around an accretive transaction. It's not just to raise capital is what I would say. So if there's something that's hugely accretive, then we'll come back into the market, and we'll work with our investor base, and we'll work with our capital formation groups and our banks, and we'll try to get something done. Somebody -- I think it was either Craig or Jason asked about the onetime charge. That was part of what we were working on in the quarter is to figure out a way to raise a pool of capital.

Your next question comes from the line of Jade Rahmani with KBW.

The commercial mortgage REIT sector has been under pressure for several years, and there only seem to be a few companies successfully emerging from the [indiscernible] downturn in values and credit with scale being a big differentiator. There's been one interesting deal in the space, which is the ARI sale to Athene of its entire loan portfolio. And at the same time, we're seeing real estate transaction activity pick up and [ LP ] investors start to increase their real estate allocations. So I wanted to ask if you're seeing any change in engagement from perhaps public commercial mortgage REITs, the smaller ones or otherwise private vehicles about potential combination scenarios.

Yes. I mean I think one of the things that we've been very good at over the years is to try to differentiate ourselves from others. And look at what we've done in the mortgage space is we built -- it goes back to the Fortress days. We built Mr. Cooper, which is now owned by Rocket. We built OneMain, which is now public market. We had sold down the equity to Apollo when I was at Fortress. We built Newrez from nothing, and that company is great.

We built Genesis or helped grow Genesis Capital. So we've been very -- what I would say is we've been pretty acquisitive, which has enabled us to grow our business. We'll continue to look at M&A, particularly in the world that you point out. It's not easy getting folks, the combination side when you talk about what I would call a lot of broken REITs. Our -- this REIT is not broken. This balance sheet is crystal clean. There's -- when I look at the equity, just to give you a sense, there's, give or take, about $100-ish million of equity that's tied up in residential deals that are marked extremely well, that are -- they are reperforming loan deals that were created by the prior management team at what was known then as Great Ajax.

So when I look at what -- where we want to go with this and I think about the overall REIT space, we'd love to do combinations with folks. We want to grow it. I will tell you the Paramount transaction has opened up the door as a firm for us to -- we probably had hundreds of conversations with LPs and different folks about -- and it's on the private side, obviously, in the public -- in different real estate activities or real estate transactions, and that will continue. So I think that's been a really good one. Our asset management business at Sculptor, they raised $4.6 billion on their last fund, and they're extremely active in the real estate space. So getting these smaller deals -- everybody wants to do a deal or we want to do deals.

Not everybody wants to give up their business, quite frankly, and something that's underperforming. I mean it's just that simple. Should these smaller businesses are very, very difficult to have them exist and to try to grow because you need the capital to grow it. So my long-winded answer is we're always actively looking to do M&A around this, and I think you're going to see more M&A in this. But our balance sheet is crystal clear, right, -- crystal clean. We're very, very different than I think some of the other legacy REITs that have, quite frankly, suffered a little bit here based on some of the earlier vintage lending that's occurred.

There are no further questions at this time. I will now turn the call back over to Michael Nierenberg for closing remarks.

Thanks so much for your questions. Have a great weekend. Look forward to updating you throughout the quarter.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. At this time, I would like to welcome everyone to the Rithm Property Trust Fourth Quarter 2025 Earnings Call. [Operator Instructions] Thank you.

I would now like to turn the call over to Emma Hoelke, Deputy General Counsel. You may begin.

Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Property Trust's fourth quarter and full year 2025 earnings call.

Joining me today are Michael Nierenberg, Chief Executive Officer of Rithm Capital and Rithm Property Trust; and Nick Santoro, Chief Financial Officer of Rithm Capital and Rithm Property Trust.

Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Property Trust website, www.rithmpropertytrust.com. If you've not already done so, I'd encourage you to download the presentation now.

I would like to point out that certain statements made today will be forward-looking statements, including any statements regarding illustrative portfolios or earnings. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC.

In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

With that, I will turn the call over to Michael.

Thanks, Emma. Good morning, and happy Friday, the 13th. Thanks for joining us on Rithm Property Trust, our fourth quarter earnings call.

Just a few things. While investment activity remained light away from a small investment that Rithm Property Trust made in the Paramount transaction that our parent, Rithm announced in December, the balance sheet, cash, the company remains in great shape.

During the fourth quarter, we also announced a reverse split of our shares on a 6:1. So when you look at it today, obviously, with the stock trading something between $15 and $16 versus where it was, I think it was something around $2, right? We feel like it's going to hopefully attract more interest in the stock with a higher -- obviously, a higher share price, recognizing that we did do a reverse split.

As many of you know, and we've said this repeatedly, we took over the management contract of what was formerly known as Great Ajax in June of 2024 with the intent of making it a dedicated commercial real estate vehicle as well as an opportunistic investment vehicle. What we did then is we repositioned the company. We cleaned up the balance sheet. We raised capital. And today, we remain focused on what I would say is a potential recap of the company along with earnings and dividend growth.

We have a clear path, which depends on capital formation to be clear, to take the company from flat earnings to a future state where the company is earning something between $1.60 and $1.70 per share and trades, give or take, about a 9% dividend yield with a book value of approximately $20. That all depends on; one, the recap; and two, where you actually raise the capital.

The plan for the vehicle would be to acquire multifamily loans from our operating business, Genesis, which we have already identified those -- that pool of loans along with other commercial real estate investments, so there will be no J-curve as we think about earnings growth and where we're going with the vehicle. Today, as we know, many REITs, BDCs and other capital vehicles are not trading well. And while we will be patient, we hope to accomplish this when the markets stabilize.

I'll now refer to the supplement, which we have posted online, and I'm going to begin on Page 3. So when you look at the company today, obviously, there's a pretty active investment pipeline. The company today sits with, give or take, about $100 million of cash and liquidity. Total equity in the vehicle is $300 million. And when you look at our trading price, which I think is something around $15, the company is trading at roughly, give or take, something around 50% of book.

When we look at the vehicle, it is externally managed by Rithm. So when you look across the firm, we have a ton of real estate investment professionals and others, which are here to support the vehicle and support the growth. As you all know, we've done this before when we started New Residential back at Fortress in 2013, and we hope to achieve the same level of growth and success from an earnings perspective and a growth perspective in this vehicle as we go forward.

When you look at financial highlights, earnings were flat. We took over this thing, as I pointed out in June of '24, where the company wasn't making any money. You look at Q4, GAAP earnings, $2.5 million. EAD is kind of $500,000 to the negative, which leads to a per diluted share of $0.06 negative. Book value, as we pointed out, was about $300 million or $31 per diluted share.

Common stock dividend that we pay, we're going to continue to pay that dividend is 8.7% from a dividend yield perspective. And then as I pointed out, cash and liquidity is, give or take, about $100 million. Really, the whole play here is you have a clean balance sheet, you have a clean company, you have a dislocated sector in the real estate space. You have many commercial REITs, which are underwater because they have either liquidity issues, or they have a balance sheet that continues to need to get cleaned up.

For us, we're going to be patient. We're not going to keep this vehicle outstanding forever. But while saying that having a clean vehicle where we want to recap this similar to what Blackstone did around BXMT with Cap Trust, I think it was -- that is our ultimate goal here as we look to grow the vehicle. And it's not just about growth; it's how do we make our shareholders' money.

We do think that this and then some of -- a lot of the capital vehicles, including Rithm and RPT are trading at extremely low valuations. So hopefully, they write themselves. But as we think about this vehicle, we will be patient. We are sitting on cash and liquidity. We do want to do a recap. And we think from an opportunistic standpoint, we have the assets that will now take this business to grow earnings to something between $1.60 and $1.70 per share, assuming that we do a recap of the vehicle.

When you look at the portfolio on Page 6, what are we going to do with it? We speak about multifamily loans, our Genesis business, which we bought from Goldman in 2022. At that time, they were doing $1.7 billion of production. This year, I think we're projecting we're going to do something between $6 billion and $7 billion of production. We're going to be growing our multifamily lending business. We are seeing some potential opportunities in that space even around acquiring licenses to become a Fannie, Freddie servicer or originator in the multifamily space. So that's something that we're currently working on.

Obviously, we're making a big push in the commercial real estate space. We announced the acquisition of Paramount. We love that transaction. It will take a little bit of time, but we're really excited about where we sit there, our entry level, our basis and where we're going to go with that company. And then when we think about opportunistic investments, we've been very good at identifying them and acquiring them through the course of our careers, but taking the company back to 2013 on the New Residential/Rithm level.

When you look at Page 7, we talk about our ability to source, whether it be at the Rithm parent level, whether it be at Genesis, whether it be at Paramount. Obviously, we announced the closing of Crestline who -- in December. And then along with our partners at Sculptor, we have a lot of opportunity to source product.

Looking ahead at the opportunity on Page 8, Commercial real estate, we love the office story. I know there's -- yesterday, obviously, with the AI story, a lot of the commercial real estate REITs got hit. The one thing I want to point out from a company perspective, both at the Rithm level and at RPT, we have a very diversified business.

If you look at Rithm's earnings in the fourth quarter, we produced north of $400 million in earnings available for distribution. We have certain things that performed extremely well, other things where we had, for example, higher amortization in our mortgage company. But net-net, when you look at that business and you look at our diversified earnings streams, whether it would be at Rithm, Rithm Property Trust, we're very good at -- in my opinion, at creating diversified earnings streams that if one lever is not being working great, another lever will work great.

So when you look -- when we look at the opportunity here for RPT, obviously, commercial real estate, we like a lot. There will be other things in the opportunistic space that we think are going to be highly accretive to what we're going to do in this vehicle as well, and we look forward to executing around that.

So with that, I'll turn it back to the operator. We'll open up for some Q&A.

[Operator Instructions] And your first question comes from Craig Kucera with Lucid Capital Markets.

I think the Paramount transaction at Rithm Capital closed for about $1.6 billion and was generating about $300 million in NOI. Will RPT be receiving a slice of that NOI going forward? Or how should we think about the earnings impact or accretion from that investment?

You should -- I would think about it more as something that's probably -- it's back-ended. It's a pro rata share of what Rithm did on the balance sheet. So when you look at it, RPT has $50 million of the Paramount deal in -- on its balance sheet, and it will be pro rata versus Rithm.

Okay. That's helpful. And just thinking about the loans that you're originating at Genesis, which I believe would be accretive to Rithm relative to where you raised capital last year. Are you exploring -- feeding Rithm with more of those types of loans? And I guess when you talk about your future state on a larger capital base, is that sort of a wait for the common to kind of get closer to book value? Or kind of where -- what's the path there?

So Genesis, which I pointed out is going to do roughly $6 billion to $7 billion of production we expect this year. There's obviously plenty of loans that go into both the Rithm balance sheet. Obviously, if we're successful around a capital raise for RPT, there'll be loans that we've identified. So as I pointed out, there is no J-curve. The loans would go right on to the balance sheet, and you'd see a real pop in earnings at the RPT level.

We also source third party. I mean we're actually developing more and more channels around sourcing third-party loans in that very same space, whether it would be on multifamily or in some of the very -- the kind of sponsored type loans that Genesis does.

The other thing I would point out there, we have a funds business, obviously, and we have either funds or SMAs with -- whether it be with sovereigns around the globe or we also have a vehicle. We launched a fund on one of the wirehouses that's actually taking some of that product. So we have a number of different capital vehicles that are actually acquiring, whether it be Genesis loans and/or similar type loans from other originators, and we expect that to continue.

Regarding your question on the capital side, Rithm sits with anywhere from typically $1.5 billion to $2.5 billion of cash and liquidity on balance sheet at most times. Obviously, our stock is trading at a discount to book. I don't anticipate us issuing equity here. Unless there's something that's highly accretive for what we're trying to do as an organization. So -- yes, that would be my comment around the equity side.

Okay. That's helpful.

Thank you.

Your next question comes from the line of Henry Coffey with Wedbush.

It's good to be on the phone with you all. So timing, I mean, I think that's the only question at this point. Getting RPT over book value, that's a big jump. Is there a tolerance for finding other sources of capital, be they preferred or common that would allow you to move ahead with the recap plan? Or are we just going to have to kind of wait?

I think timing is a good one. I would respond to markets. So you say timing, I say markets. The answer is -- the short answer is yes. I mean there's third-party capital that wants to be part of the vehicle. Is it possible at some point that we bring in third-party capital alongside the vehicle as it exists today? I think the short answer is yes.

But while saying that, we're not going to leave this vehicle outstanding trading as where it does forever. So it's a timing thing. We want to make sure that we don't want to do something that's highly dilutive. If you recall last year, we did a pref in and around this. The company is sitting with some cash and liquidity.

We also have what I would call liquid floaters on balance sheet. So to the extent that we found something more accretive, it's likely that we would sell those down and then invest in something else. But it's a timing thing. It's a market thing, and it's also -- I would expect us to continue to add more third-party capital to our lives.

And then basically, just to kind of reiterate, the primary source of loans is going to be multifamily and what Genesis generates mainly higher-yielding repositioning loans? Or you'll be doing some more traditional multifamily lending as well inside of RPT?

I think it's -- right now, what we've identified as a pool of assets, I think it's something around $1 billion of assets that would go right into the vehicle, obviously, subject to Board approvals. And once that happened, you'd see an immediate pop in earnings. So that's the way I would view it. Could there be other types of loans? The answer is yes. But for now, you look at the Genesis loans from a levered perspective, they're well north of 15%, and I think they'll be highly accretive to what we're doing in the vehicle.

All right. I look forward to moving forward with you on this.

Good to hear your voice, Henry. Have a good weekend.

[Operator Instructions] And your next question comes from the line of Jason Stewart with Compass Point.

Interesting opportunity at Genesis. Obviously, Genesis is not a forced seller. You do know the quality of the loans you're familiar with them. But could you talk about the pros and cons of buying from a Genesis versus a third party who might be more of a motivated or forced seller in the market?

We do both is what I would say. The short answer is the more we could do, the better. Based on our third-party fundraising, we have -- I'm not going to call it insatiable demand, but we have a tremendous amount of demand for this product, both in our funds business on the Rithm balance sheet because obviously, there are higher coupon earners as well as into the Rithm Property Trust.

So it's going to be a combination of everything. We've already set up flow agreements with a number of originators. We are -- the one thing I would point out is we're extremely mindful of credit as we source product from other third parties. And one thing I like about our Genesis business is that the gentleman who runs at Clint Arrowsmith, as you've probably spoken with in the past, does a great job around credit, his background, he comes from a bank as a credit officer. That's really, really important.

So while we could turn on the jets and grow origination, we got to be mindful of our credit box, and that's something that we also have to think about as we source from third parties because you see this in this business, once things get -- and I'm not singling anybody else, but once things get a little bit where this product is probably the most in demand from what I would call our LPs and what we want to do on balance sheet. You just have to make sure you don't have any missteps around the credit side, and that's something that we're extremely mindful of.

But the long-winded -- my short answer to my long-winded explanation is we are going to source from third parties wherever we can as long as we're comfortable with the credit.

Got it. Okay. And you mentioned banks. I would have expected banks to have been sort of rate dislocated sellers in this market. Is that something you're seeing an opportunity to acquire, especially since it's multi? Or is that opportunity past?

You're not seeing a lot of bank selling is what I would say when I talk about the banks, we launched a fund on one of the wirehouses on the bank platform. And that's -- again, that's creating more demand for the product that Genesis is making and some of our non-QM products.

So I think the banks are probably better buyers. What you've seen from the banks, the regional banks pulling back, right? We've seen that over the course of the past couple of years, which has created this great opportunity for Genesis and some of our other lending businesses to grow production.

Okay. Got it. One big picture question. You mentioned the Fannie, Freddie licensing. Is the ultimate goal here to be able to go end-to-end sort of from an intermediate loan to permanent financing through the GSEs? Is that the vision for RPT down the road to have that license and create the customer relationship end-to-end?

Yes, if we could do it, for sure. I mean when you think about the power of the franchise, look at Genesis. Genesis could go and they can make a loan to a builder in, let's just say, in the build-to-rent space. The mortgage company, Newrez, can then put a -- work in conjunction with Genesis and provide loans, for example, to those -- to that community of builders or it could be in either a builder that's buying, building and selling on a go-forward basis.

So a lot of our thesis and what we're trying to do across the board is to be able to capture as much wallet as we can from our customer base. You look even at the mortgage company, which has over 4 million customers, are there other products that we could offer them that are going to generate earnings for our shareholders, and we're working on cards and other things that we hope to roll out here in the near future. So that is an example, but end-to-end is something that we're trying to do for sure.

Appreciate it.

Thanks, Jason.

There are no further questions at this time. I will now turn the call back over to Michael Nierenberg for closing remarks.

Have a great holiday weekend, everyone. Thanks for your support. Thanks for dialing in and be safe. Speak to you soon.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rithm Property Trust Third Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Emma Hoelke, Associate General Counsel. Emma, please go ahead.

Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Property Trust Third Quarter 2025 Earnings Call. Joining me today are Michael Nierenberg, Chief Executive Officer of Rithm Capital and Rithm Property Trust; and Nick Santoro, Chief Financial Officer of Rithm Capital and Rithm Property Trust.

Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Property Trust website, www.rithmpropertytrust.com. If you've not already done so, I'd encourage you to download the presentation now.

I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC.

In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

And with that, I will turn the call over to Michael.

Thanks, Emma. Good morning, and thanks for joining us today for the Rithm Property Trust call. There's -- during the quarter, we didn't have a ton of activity. What I would say is that when we took over this company last June, we stabilized the company, which at that time, I think was losing in and around $10 million a quarter. Today, the company essentially is flat when you take into account earnings and we're still paying a $0.06 dividend. Along the way, we've liquidated what I would say a bunch of resi assets. We've added some commercial real estate floaters or CMBS floaters, which are higher yielding top part of the capital stack with some reasonable yield.

The other thing about these assets from a liquidity standpoint, they're very easy to create liquidity. So when we take a step back and we look at the assets that we've added, the assets that we've sold to the extent that we find an interesting opportunity, and we're always on the hunt as everybody knows, we'll be able to liquidate these -- a number of these assets and then use some of that capital to redeploy into either higher-yielding assets or something that's more strategic for the company.

The real question for the company is where do we go from here? So we have a few options. One, we can recap the vehicle with an offering of equity associated with a pool of assets or other types of instruments that could be in the fixed income world that will provide real income for investors. Two is, we could explore some kind of liquidation of the company. And I bring that up because with book value at $5.30 and the stock trading at $2.40-odd, clearly, there's a huge value play for equity investors in this. Or three is, stay the course. And what I would say on three is we're not going to just stay the course and leave something outstanding for the sake of leaving something outstanding.

If you listen to our Rithm earnings call yesterday, we discussed our most recent acquisition at Rithm and our affiliates, which is the Paramount transaction, where we agreed to take private one of the large office REITs here in New York City and San Francisco. Quite frankly, we're really excited about that deal and really excited about the returns on that deal. So one of the questions we got on yesterday's call, is it something that we consider adding some Paramount to the -- adding to the Rithm Property Trust and the answer, what I said was yes.

Longer term, as we look at this vehicle, we are developing a direct lending business, and this platform would be perfect for Rithm Property Trust. So as we think about that, we'll work in conjunction with our Genesis partners, which -- and Genesis, so everybody knows, is our residential transition loan organization where we make construction loans to kind of mid-tier type sponsors and not some of the larger players. So when we look at that, our experience there, we grew a company that was doing $1.7 billion in production. Today, we're going to -- this year, we'll probably do north of $5 billion. The asset yields on those are great, and we have a real business around it and what we'll likely do is grow that and some of those products could be perfect for our direct lending business.

What I do think one more time as we look at the equity and where it trades relative to book value and some of the things that we do, it's -- just to reiterate, we're not going to leave this thing outstanding for the sake of leaving a company outstanding. We need to either figure out a way to grow it or at some point, we'll likely think about an auction process for the company and realize what I think is going to be true book value.

So with that, I'll turn -- I'll flip -- we'll start -- we have a small deck. There's not a ton in there, quite frankly. We'll start on Page 3, and then we'll have a Q&A, and then we'll go from there.

So as I mentioned earlier, Rithm Property Trust, we -- it was formerly known as Great Ajax. It was a residential mortgage REIT. Quite frankly, it was a little bit broken. We took over the management of that, rebranded it to Rithm Property Trust, set out on a mission to deploy more capital in the commercial real estate business. We did a small preferred offering, which helped us raise a bunch of cash. So when you look at the company today, we're sitting with in and around $100 million of cash. The company has about $300 million in total equity. And the pipelines look great.

The portfolio is about $308 million today. But what I think this vehicle will do is afford us the ability to continue to hunt for things to try to grow the vehicle. And I've used in the past what happened with BXMT, which is Blackstone's mortgage REIT, where they actually created a vehicle around a pool of assets and really grew it. So hopefully, we could do that. And if not, well, I gave you the other options before.

Looking at on Page 4, your financial highlights. Effectively, the company was flat quarter-over-quarter, still maintained a $0.06 dividend. Cash and cash equivalents on balance sheet at the end of the quarter, $81 million and total equity is $292 million.

When you look at Page 5, the opportunity we -- during the quarter, we actually originated a $21 million loan on a retail -- a grocery-anchored retail center outside Seattle. The yield on that will likely be in the mid-teens. So when we look at that and we think about our ability to grow in some of the lending activities, that's something that gets us excited here. But we got to -- quite frankly, we have to execute on that plan.

When you look at Rithm Property Trust on this page, on Page 5, you might say why Rithm Property Trust. There's no legacy anything, quite frankly, in the company. And I think it's truly -- this is truly upside as we -- to the extent that we could grow the vehicle.

Page 6, just talks about how when we first took over the company, we stabilized earnings. As we go forward again, earnings are pretty flat. We need to do something more material to actually generate earnings, and that's something we're keenly focused on.

Page 7 is our typical slide, which illustrates what the future state of the portfolio could be. I would look at this vehicle as more being opportunistic in nature than some of the other things out there.

So with that, I'll turn it back to the operator. We'll open up for some Q&A. And if anybody has any questions, please don't hesitate to ask.

[Operator Instructions] Your first question comes from the line of Tom Catherwood with BTIG.

Michael, obviously, you laid out a bunch of different avenues that you could go forward with, with the 3 that you laid out at the beginning. But maybe just take the stay the course one for this question. You talked last quarter about $50 million of loans kind of being pretty close to the finish line. You did $21 million this quarter. What does that kind of pool in closing look like right now?

There's a couple of things here. One is I brought up the Paramount deal. That's a big deal. I mean there's $6.60 on 13 million square feet. So it's likely this company, depending upon Board approval, could participate in that transaction. One thing we're working on in conjunction with our Genesis partners, when you think about that business, we make multifamily loans, we make residential transitional loans. And then at Rithm and Rithm Property Trust, we're doing more in the direct lending space.

We'd really like to grow our direct lending presence. We've been adding some bodies around the house. And I think this vehicle could be perfect for that. So some of the things when we mentioned last quarter, we spoke about $50 million in loans, we did this $21 million loan, which we like very much. We have passed on what I would say, more of and some of this is, as you think about the mayoral election here, when we think about some rent-stabilized stuff that we were looking at, we're not going to do rent-stabilized loans in New York City right now.

We also passed -- initially, we were down the path on a Rosewood Hotel in Dallas. We went down and did a bunch of diligence on that and just couldn't get comfortable on that. So we passed on that. So in the quarter, we did -- obviously, the $21 million loan, we're sitting with roughly $100 million of cash and liquidity. We look at what's sitting on balance sheet on the retained side. And as we go forward, it's really going to be about direct lending, the growth there and some more opportunistic situations.

Great. Appreciate that. And then on Paramount more specifically, and I know the deal is still coming together, obviously, hasn't closed, so all options are on the table. But when we think of that company, it had historically had a part of its business that was dedicated to making opportunistic commercial real estate loans, whether that was mezz positions, preferred positions, so be it. Is the potential thought to carve off whatever may be remaining of that or whatever capacity that exists within their funds? Or is this potentially RPT taking a position somewhere else in the capital stack as you go towards that closing? And again, if you can't talk about it, I fully understand, just trying to get ideas of what this might look like.

Yes. No, it's a good question. They had some legacy funds. I would assume for purposes of this discussion, there's nothing to do with Rithm Property Trust and those funds. It would likely be a position that would be pari passu alongside Rithm, the parent -- our parent company, obviously, on the underprop goes. So when you think about it, there's 13 assets between New York and San Francisco, and it would be a position in those specific assets on the property side.

Got it. Got it. And then last one for me, Michael, you make this comment about the discount to book value and all of that, and it makes sense. But when we look across kind of all of the commercial real estate mortgage space, the discounts are huge have gotten more so, obviously, since Tricolor since their bankruptcy since first brands, since we had the regional banking issue a couple of weeks ago. In general, commercial mortgage REITs have just been lumped together with this existential fear about credit.

Now you sit kind of at the nexus of a bunch of different credit vehicles. What's your view right now on kind of what's real out there risk-wise for credit, be it real estate or otherwise? And what's kind of overdone right now? Because I think that's -- it's not just hitting RPT, it's hitting everybody. What are your thoughts on the market right now?

So I think it's bifurcated. I think there's a couple of situations. One is a lot of the legacy commercial real estate REITs were still saddled with bad loans that need to get and I'm not saying bad loans, let's just say, underwater loans that need to get worked out. We do not have any of those here at our firm. And that goes for both on the Rithm level and on the Rithm Property Trust level. So when we set out on a mission to kind of rebrand this vehicle, we said we're going to get into the commercial real estate space again because we don't have any legacy issues. So I think when you look across the spectrum, there's a number of, what I would say, REITs out there that are still working through some of their issues and this vehicle is clean. So I think that's one.

Two, when you think about credit and you think about like even when we think about this Paramount deal, why office? Not everybody can do office because a lot of folks are still reworking their existing office portfolio. So we looked at that as a real opportunity for us because, one, we -- as a company, we have a need for 100,000 square feet. So we're in the market looking at office pretty much every day, and we have a really good pulse on what's happening in the market.

As we think about credit, the capital markets for commercial real estate are wide open. You're seeing more and more CMBS get done prior to us announcing this deal, the company did a CMBS deal on 1301 Sixth Avenue. So I think the credit markets are wide open with the breadth of the Rithm team and our other affiliates, there's a ton of things to look at. I will say in commercial real estate, and I'm sure you know this, you got to be really, really careful, not just in commercial real estate and everything, but in commercial real estate, particularly when you have one-way risk on a single type of property. So when we think about where we could go with this in the direct lending space and create more diversified pools of assets or diversified lending around the business, it gives us pretty good comfort that we're going to be able to do wonderful things here.

What I would say on the discount to book, quite frankly, if we could all get paid in equity at these kind of levels, I think we'd love to do that. So the net of it is we're extremely optimistic on where we could go. The thing is you need capital to grow. And with the stock trading at whatever, 50-odd percent of book, it's very difficult. My view and our view is not to dilute shareholders. But if there's a way to kind of grow out of this with something meaningful and some sizable offering associated with a pool of assets, we'll consider that.

Your next question comes from the line of Craig Kucera with Lucid Capital Markets.

I wanted to circle back to the Paramount transaction. Can you give us a sense of what the economics of that might look like for RPT? I mean, is that sort of in the ballpark of what you've done this year with the, call it, the office senior sub deal of maybe 12% or the retail asset at 11%?

The Paramount deal is more equity based. We're playing around with a couple of different structures. Are there different ways to think about this. So I don't have a specific answer. But on the surface, when you look at the Paramount deal and the way that we're doing this, we paid $6.60 for the company. That equates to about $1.6 billion before some of the, what I would say, fees and noise around this. So that gets you roughly $1.8 billion. The amount of cash that sits on balance sheet is a little south of $500 million, that gets you to $1.3 billion.

Rithm, the parent will put in, give or take, about $300 million of equity. The contemplation, again, subject to Board approval would be for Paramount to put in about $50 million. So that gets you to a little under $1 billion. Rithm, the parent will then be raising, and we're in the market now, a fund around the remaining, call it, $1 billion. And that's the so-called funding of the vehicle. When we look at economics, here's how to think about this.

We are assuming going in a cap rate a little bit south of 7% are going in so-called cost per foot is about a little under $600 a foot. When you think about replacement costs, the replacement cost, including land in New York City is likely something around $3,000 a foot. So effectively, you're going in to acquire Class A office buildings at a 75% discount-ish to replacement cost. When you look at the stabilized cost, you're in the low 700s, and we think our exit strategy here, just to give you a sense, is something around 6% on New York and 6.5% to 6.75% on San Fran. What that does based on a -- let's use Rithm Property Trust, a $50 million equity check gives you about a 2x MOIC on that $50 million and a 20-plus percent return based on our assumptions.

So we are extremely excited about this transaction. This is in investing, and we like to think of us and our business as a more opportunistic investing. You very rarely have the opportunity to deploy a large amount of capital in Class A office assets that are located in 2 of the gateway cities in the U.S., which are obviously in New York and San Francisco in a dislocated market where we think we're going to generate outsized returns for our investors. So that's the investment thesis here. We'd love for Rithm Property Trust to participate in that. And hopefully, we have a good result around it.

I appreciate the color. That was very thorough. I'd like to think about the flip side of that, though. Could you envision a scenario where Rithm Capital could potentially deploy capital into RPT in order to sort of jumpstart the scale of the company?

It's a really good question. I mean I think that when you think about equity offerings or you think about preferred offerings or something like that, and we've had a number of conversations, what I would say, our banking partners on the street about this, how to think about a potential rights offering where Rithm backs us that against a pool of assets. I don't know -- quite frankly, those conversations go on all the time. I don't know that there's anything to do right now today. There is one deal that's happening in the marketplace, but it's small in nature.

I think there's -- I don't have all the details, but I think it's between an $80 million and $100 million offering that one of the banks is doing against either a pool of assets or that's guaranteed by a parent at a discount, I think, of 10% to 15% to -- the backstop, I think, is 10% to 15% where the offering is coming. So we have to be thoughtful about how this works for both Paramount and -- I mean, Rithm Property Trust and how it would work for Rithm the parent. I think to keep it clean, we'd prefer to do something that's not like that, but I don't know yet just to where we ultimately go.

Got it. And just one more for me. Just in the process of raising capital around this Paramount transaction, I know you're looking for other third-party sources of capital. Has that opened up any potential partners for RPC? Because I believe like in the past, you've said that you are looking for a third party to sort of jumpstart the company.

Yes. I mean the amount of conversations we as a firm have and when you think about the firm, I can tell you whether it be at the Rithm level, whether it be at the -- even Crestline, which hasn't closed, we expect that deal to close on December 1 or even at the Sculptor level. There's a lot of what I would say, cross-pollinization around the firm as we have a ton of conversations with LPs and other partners. So this deal has opened up conversations that truly we wouldn't have had 6 months ago. So we're super excited about that. There's a ton of opportunity. If we wanted to fund this entire Paramount deal yesterday with third-party capital, we could do that in a heartbeat. It's just how do we think about, as an organization, maximizing returns for our shareholders.

That concludes our question-and-answer session. I will now turn the call back over to Michael Nierenberg for closing remarks.

Great. So thanks for dialing in, and guys, I appreciate the questions. Again, just to be clear, we're going to do anything and all we can to figure out a way to grow earnings in the company, not just grow the company but grow earnings in this company. We do feel that the equity is fundamentally mispriced. I think to some of the questions we heard, a number of these REITs have equity that's fundamentally mispriced. The difference here is we do not have any legacy issues, and it should be onward and upward. We'll keep you posted throughout the quarter and other things that we're doing around the company. And if you have any questions, don't hesitate to follow up.

With that, happy Halloween. Have a great weekend and look forward to updating everybody soon. Thank you.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rithm Property Trust, Inc. Second Quarter 2025 Earnings Conference Call.

[Operator Instructions]

I would Now like to turn the conference over to Emma Bolla, Associate General Counsel. Emma, you may begin.

Thank you, and good afternoon, everyone. I would like to thank you for joining us today for Rithm Property Trust's Second Quarter 2025 Earnings Call. Joining me today are Michael Nierenberg, Chairman, CEO and President of Rithm Capital and CEO of Rithm Property Trust; and Nick Santoro, Chief Financial Officer of Rithm Capital and Rithm Property Trust.

Throughout the call, we're going to reference the earnings supplement that was posted this afternoon to the Rithm Property Trust website, www.rithmpropertytrust.com. If you've not already done so, I'd encourage you to download the presentation now. I would like to point out that some statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results.

I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement.

With that, I will turn the call over to Michael.

Good afternoon. Thanks, Emma. Good afternoon, everyone, and thanks for joining the call. The way -- 1 year ago, we took over the management contract of this REIT, which was formerly known as Great Ajax. The company was losing money, needed more liquidity and quite frankly, a new leadership team and a new mission. We renamed the company to Rithm Property Trust. We sold down legacy assets, which were not accretive for shareholders, and we repositioned the company to be an opportunistic commercial real estate REIT.

Over the course of the past year, we went out and deployed $300 million or bought $300 million in commercial real estate assets. We raised a new pool of capital without diluting shareholders. We did that via a pref offering, and we put the company on a path towards success and profitability. While the numbers this past quarter are similar to last, we have a ton of deals and investments in the pipeline.

When we're at Fortress, we took a company at that time, which was known as New Residential, which is currently Rithm Capital today from $1 billion of equity in 2013. Today, we stand at almost $8 billion of permanent capital or equity, and we manage over $80 billion of assets across all of our various business lines. We intend to do the same here. Unfortunately, it takes some time.

If you think about the company this way, I'm confident you will be rewarded well in the future. One, that we do not have any legacy commercial real estate assets. Two, the equity trades at a 50% discount to book. So we believe as we continue to execute on our plan, there'll be huge upside in the valuation of the equity. Three, with what's going on in the real estate market, whether it be on the equity or debt side, we have very large pipelines of deals we are currently evaluating. And then we also have a number of deals that should close here in the third quarter. So net-net, while we're not thrilled with the current stock price, obviously, I believe the value proposition here is a good one.

I'll now refer to the supplement, which we have posted online. I'm going to start on Page 3. So again, the way to think about this is an opportunistic equity investment in a publicly traded commercial real estate REIT, and it doesn't have to be commercial. It could be opportunistic as well. Current pipeline is in and around $2 billion of assets that we're currently evaluating. We have a little under $300 million in total equity. Our real estate portfolio is $300 million, and we're sitting on approximately $100 million of cash and liquidity.

As you flip to Page 4, earnings kind of fairly similar to where it was last quarter, $1.4 million in GAAP income or $0.03 per diluted share. The EAD is about $100,000 or effectively -- virtually 0. Second quarter common stock dividend is $0.06 per common share. We do not intend to reduce that anytime here soon. Cash and cash equivalents, about $98.6 million and total equity of $2.95 million. GAAP book value is $5.37 with the stock trading, I believe, something around $2.70, so about a 50% discount to book.

The Opportunity for Rithm Property Trust, why now? We're entering what we think the real estate market at a very attractive time. We've been pretty vocal about that. While saying that, not every real estate asset is the same, and we need to be extremely diligent and careful in our underwriting and how we deploy capital in this and every other vehicle that we manage.

So why Rithm Property Trust, one, again, no legacy commercial real estate exposure. Two, again, the company is trading at a sizable discount to book value; three, the amount of employees and management team here at Rithm, and this does not include our GreenBarn subsidiary or Sculptor, there's approximately 75 to 100 folks in the house here that work on our various vehicles.

When we think about the commercial real estate landscape, one, the repricing of commercial real estate assets, the continuous debt maturities and dislocations in the market are and will continue to create opportunities across the capital stack. As we look at changing capital structures, there's a huge need for pref equity in a number of the different assets and things that we're looking at, and that will continue to create what we think are extremely attractive opportunities to deploy capital.

As we go forward, the pipeline as of the end of June was $2 billion of different types of real estate investments that include senior mortgages, subordinate loans, mezzanine loans and other opportunistic investments. The -- and finally, our emphasis on growth. As we achieve scale, that is something that's going to enable us, in our own opinion, to drive the valuation of the company higher.

Path to Profitability, if you have a look at Page 6, when we took over the company, as I mentioned before, the company was losing money. Q2 of '24, the company lost $0.35 per diluted share. If you look at where we are now, we made $0.03 per diluted share. So continued risk discipline around, one, the asset side of the balance sheet; and then two, as we think about growing earnings. Like I pointed out in my opening remarks, it will take some time because the equity base here is $300 million, and we intend to take the same vehicle or this vehicle like we did at Fortress, where we started new residential with $1 billion of assets, and we grew it to $8 billion over time.

When you look at 7, as we think about Q2 investment activities and you look at where we are today, one, the deal source of approximately $6.5 billion. And as I pointed out, we have a number of deals that we believe we're going to close here in the third quarter, and that should deploy about $50 million of equity here with double-digit returns. We look at the investment opportunities. There's a number of different things we look at. Again, as I pointed out, whether it be debt, pref equity, mezz and opportunistic equity across the stack.

Strength of the platform, we are -- at Rithm, obviously, we take our performance extremely seriously. When you look at Rithm as a whole from a parent perspective, typically, our ROEs are anywhere from 15% to 20%. We'd like to try to position this company to be able to do the same thing over time.

Page 8, just looking at the potential portfolio over the future between CMBS senior loans, opportunistic investments and subordinated and mezzanine loans, we believe that we're going to generate target yields in and around 15%.

So before I turn it over to Q&A, what I would say is we love the optionality in the platform. We're very happy with where the balance sheet stands. We are working on a number of situations that I believe will enable us to deploy significant amounts of capital. We do not intend to dilute shareholders to the extent that we don't need to. So that will likely be bringing in third-party partners on some of the larger things that we're looking at.

And with that, I'll turn it back to the operator, and we'll open up for Q&A.

[Operator Instructions]

Your first question comes from Jason Stewart with Janney.

In terms of the near-term opportunities in the pipeline, could you talk about how that splits up between the different sectors, loans, securities, et cetera?

Sure. So most of the stuff -- when we look at securities today, for example, when you look at our portfolio, most of it is floating rate around the -- on the real estate side. When we look going forward, and most of that is up in the capital stack in AAA CMBS. We do have some loans on the balance sheet that we made. We did a small SRT deal with one of our larger bank counterparties.

Going forward, looking at pipelines, we have anything from something that will fund, we're hopeful in the next couple of weeks, which is a retail asset up in Seattle, anchored by some very strong tenants, including Albertsons, Staples, et cetera. We're looking at stuff in the multifamily space. We have some nice opportunities, we believe, on the office side as well. And then we're looking at some larger M&A opportunities that we think could change the landscape of this organization for years to come.

Okay. That's helpful. And then on the last point, and I think you started to perhaps talk about this in your comments, you said commercial and opportunistic, but not necessarily doesn't have to be commercial. Maybe you could elaborate a little bit more on what you meant there in terms of opportunistic.

It's going to be -- right now, the intent is for this vehicle to be focused on commercial opportunities. I think back to our Fortress days when we bought a little under $4 billion of consumer loans into our REIT along with some other capital vehicles we had, and that was the beginning of what became OneMain Financial. I'm just using that as an example. Right now, though, what I would say is I'd focus the focus for all of us here at Rithm is to build this as a dedicated opportunistic commercial REIT.

Your next question comes from the line of Randy Binner with B. Riley Securities.

This is Tim D'Agostino on for Randy Binner. When we think about the go-forward plan for the portfolio, what should we think about in terms of capital being put to work per quarter and where we may see that capital be putting to work?

So again, it's the capital that's going to -- where it's going to go is going to be the very same assets that I just described. So you'll have the pipeline between retail, multifamily office. We have some industrial things we're looking at. We did an SRT deal with one of our -- like I pointed out, one of our larger bank counterparties. So it's going to be in those very same pockets.

When you think about capital deployment, the good news is we're sitting with roughly $100 million of cash and liquidity on balance sheet, where as much as we want to deploy that capital yesterday, and we could, we want to make sure that we are -- we find the right opportunities to create what we're really striving to do, which is going to be something with teens type returns. So that $100 million that sits there, I think our projections are we'll be deploying about $50 million this quarter here in the third quarter, assuming that all the different loan opportunities we're working on close here in the third quarter.

And then going forward, obviously, we'd like the stock to right itself, but we'll likely continue to tap into the pref market as well, so we don't dilute shareholders.

Your next question comes from the line of Tom Catherwood with BTIG.

So my question, I want to kind of try to tie a couple of ends together here. So it really does sound like your pipeline of opportunities has scaled up. And you took us through the cleanup that you did on legacy Great Ajax over the past 12 months. But as far as that pipeline, and it seems like you've gotten to the point in time when it's -- it will really be an execution opportunity right now.

Was it just a matter of time of building that? Or was there a shift in what you were looking at that helped that scale? Or were you missing out in deals and you've gotten more aggressive and so more is dropping to the bottom line? What's kind of changed between 1Q and 2Q that's helped that pipeline scale the way it has?

Yes. No, I think those are great questions. One is the team is out hunting and having lots of conversations, whether it be with our large bank friends with some third-party origination platforms or just stuff that -- where we get calls directly from sponsors. So we're seeing a lot more of that. And I think part of it is building the -- not the Rithm brand because I think the Rithm brand resonates extremely well in the investment community, but the Rithm Property Trust brand, which wasn't really as well known since -- other than when we initially took over the platform.

So the pipelines are building. The teams are having a ton of conversation. Certain -- what I would say, though, on the flip side of that is we're not going to compete for the last dollar to drive cap rates extremely low on, for example, on office, if we don't think it makes sense for the vehicle. Our goal here is to take what we have, which is as clean, in our opinion, a clean balance sheet, sitting on some liquidity, we could use more and deploy that capital prudently with teens type returns. We're not going to get into a bidding war with somebody at least for now on things that we don't think make a lot of sense.

So I think it's a combination of, one, we are seeing a lot more directly from sponsors. Two, we're having a lot more conversations with our banking partners, which we have a lot of. And three, the brand is -- the Rithm Property Trust brand overall with the great job the team is doing is getting out there. So the teams are getting the call on these, not just, for example, the largest real estate players in the industry.

Got it. Appreciate that color, Michael. And then if we think of sources and uses here, right? The opportunity set scales, there's more deals falling to the bottom line. You've obviously built this large book of CMBS securities. You did it over a period of time where spreads were wider. They've obviously tightened down towards record levels again.

How do you think about either taking on more debt, using the cash on your balance sheet or even selling the securities, which again, we assume you would have a gain on in order to put them into more of this direct lending opportunity, which is what it sounds like that's more of -- that's in that pipeline right now. How do you think of the securities book as a funding source?

It could easily be that, right? Because one of the reasons why -- and thanks for leading me to the answer here. One of the reasons why we stayed up in the cap stack was as we continue to grow this, we wanted to deploy capital to create some earnings for the balance sheet. As we look at some of the opportunities we're seeing and typically -- and the way we're going to grow this company, honestly, is by doing things that are a little bit more meaningful and larger over time.

Yes, we'll hit our singles, but we have to do something that's meaningful and be able to raise a bunch of capital around that. And that -- and the way that -- if you look, we did a -- I think it was a $50 million pref offering kind of a few months back. We don't want to dilute shareholders to the extent that we don't need to. I think what we're going to likely do is bringing third-party capital alongside a larger transaction, which is going to help get this platform off the ground. And then I think once we do that, you're going to see the stock really right itself. So I think the optionality in this company and the stock, I think, is extremely high and significant to the upside.

Got it. Appreciate that. And last one for me. If we think of kind of once you allocate that, let's assume the $50 million in opportunities that are near-term close. If we do a quick back of the envelope, that looks to us like just about maybe a little bit over $0.01 a share per quarter. Is that -- does that check out? And is this the kind of thing where to get up to that dividend level, you're going to need to put out $300 million of incremental capital? Or are there other catalysts that help you kind of boost earnings back to that dividend level?

I think in your math, it's about $0.02 a quarter. Again, it's -- we're going to have to create some scale around our capital formation side. But I think we'll get to whatever our current dividend that we're paying. We came into this thing not looking to cut the dividend because folks have suffered a lot of pain prior to us acquiring the management contract here. So we're going to do all we can to maintain this dividend and continue to try to grow earnings.

Your next question comes from the line of Doug Harter with UBS.

Hoping you could just talk about kind of trying to square all the things you've said about a growing pipeline, lack of interest in diluting shareholders. And just how you think about kind of the patience that you have to try to scale the business while kind of looking at those 2 factors and kind of how you think that plays out?

I think the scale of the business is going to be around a larger scale transaction. That's how we're going to be able to raise capital to create a vehicle that's where we're going to start generating significant earnings. While saying that, I alluded to likely bringing third-party capital alongside us. I think you'll see that without going out to truly dilute the shareholders here that with the stock trading at, again, give or take, $2.70, I don't -- you can't -- quite frankly, you can't raise enough stock around that level to make a significant dent in this company.

Pipeline-wise, I'm looking at 11 different transactions on a sheet in front of me right here. They range anywhere from a large M&A opportunity to a retail loan that I pointed out. I gave you some color with Albertsons and Staples as some of the anchor tenants to looking at some multifamily stuff in Florida to some New Jersey office to some local office. So our pipelines are pretty robust. The one thing we want to make sure that we do, though, is obviously be extremely thoughtful on deploying the capital.

And that concludes our question-and-answer session. And I will now turn the conference back over to Michael Nierenberg for closing comments.

Thanks so much for the questions, guys. Look forward to updating you next quarter or during the quarter. Again, I do like where we sit. We're going to be patient, but we need to try to grow our stock price here, and we're extremely mindful of that. So have a great rest of the summer, if we don't chat, and have a good weekend. Thank you.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.